The statement of financial position is NOT associated with the income statement. It is associated with the balance sheet.
Statement Of Operations
This name is used instead of income statement.
The income statement heading will specify which of the following?
A POINT In Time
A balance sheet's heading is a point in time.
A PERIOD Of Time
An income statement covers the period of time shown in its heading.
Amounts earned by a company in its main operating activities are known as __________.
Revenues
This is the correct answer.
Gains
Gains pertain to items outside of the main operations.
A company disposes of equipment that it no longer uses in its business. The amount received by the company is more than the amount the asset is carried at in the accounting records. The company will report a(n) __________.
Expense
Expenses are associated with the main operations of a company... not with the disposal of long-term assets.
Gain
Because the sale of equipment is outside of the main business activity and the amount received was greater than the amount at which the asset was carried in the company books, it is reported as a gain. The amount of the gain is the amount by which the proceeds exceeds the carrying amount.
Loss
To have a loss the proceeds would have to be less than the carrying amount.
Revenue
Revenues involve the main operations of the company... not with the disposal of long-term assets.
On December 1, a company borrowed $100,000 at 12% per year. The interest will be paid quarterly, with the first payment due on March 1. What should the company report on its income statement for December?
Nothing
The company is incurring (having) interest expense every day that the loan is outstanding. The December income statement must report one month's interest expense.
Interest Expense Of $1,000
The income statement must report the interest incurred regardless of the date the interest is paid. $100,000 X .12 X 1/12 = $1,000.
Is a retailer's Interest Expense an operating expense or a non-operating expense?
Operating Expense
Interest is associated with the finance function, not the main activity of buying/producing and selling.
Non-operating Expense
Interest is associated with the finance function, which is not the main operations of the company.
The income statement line gross profit will appear on which income statement format?
Single-step
There is no subtotal in the single-step income statement.
Multiple-step
It will appear as the result of subtracting the cost of goods sold from net sales.
Which income statement format segregates the operating revenues and expenses from the non-operating revenues and expenses?
Single-step
The single-step statement shows operating and non-operating revenues in one group, and it shows operating and non-operating expenses as another group.
Multiple-step
Multiple-step shows operating revenues and expenses separate from the non-operating revenues and expenses.
Interest earned on investments would appear in which section of a retailer's multiple-step income statement?
Non-operating
Interest revenue is outside of a company's main operations.
Operating
Interest earned is a non-operating revenue.
Would Not Appear
Interest earned would appear in the non-operating section.
Under the accrual basis of accounting, revenues are recognized in the accounting period in which __________.
Cash Is Received
Under the accrual basis of accounting, revenues are recognized when the revenues are earned, not when the cash is received.
Revenues Are Earned
Under the accrual basis of accounting, revenues are recognized when earned.
Net Sales minus the Cost of Goods Sold is __________.
Income From Operations
Operating Income is Gross Profit minus Operating Expenses.
The combination of net income + other comprehensive income is known as __________ income.
Which basis of accounting best measures profitability during a short time interval?
Cash Basis
When cash is collected does not determine when sales and service revenues have been earned. When payments are made does not determine when expenses are incurred.
Gross Profit minus Operating Expenses is best defined as __________.
Net Income
This is not the best answer.
This could be true if there were no non-operating revenues and expenses.
Net Sales
Net Sales is Gross Sales minus Sales Discounts and Sales Returns and Allowances.
What is defined as sales minus all variable expenses?
Are the draws of a sole proprietor reported as an expense on the company's income statement?
A corporation's net income will cause an increase to which of the following?
Accumulated Other Comprehensive Income
If a company's stock is publicly traded, is it a requirement that the earnings per share appear on the income statement?
Yes
The earnings per share must appear on the income statement if a corporation's stock is publicly traded.
No
The earnings per share must appear on the income statement if a corporation's stock is publicly traded.
Are the notes to the financial statements considered to be an integral part of the financial statements?